Diffusion Engineers shares list at 15% premium over IPO price

Shares of Diffusion Engineers made a positive debut on the stock exchanges on Friday, listing at a premium of 15% over the issue price. The stock of the welding equipment manufacturers and suppliers listed at ₹193.5 on the NSE against the initial public offering price of ₹168. On the BSE, the stock opened at ₹188, up 11.9% over the issue price.

Post listing, Diffusion Engineers shares gained as much as 20.9% to touch a high of ₹203.17 on the NSE, while the market capitalisation climbed to ₹760.4 crore. The stock hit a high of ₹197.35 on the BSE.

The listing of Diffusion Engineers was below market expectations as the stock was commanding a grey market premium (GMP) of ₹58 in the unlisted market, indicating listing to be around ₹226, up 34.5% over the IPO price.

“Diffusion Engineers Limited, which manufactures heavy machinery for core industries, wear plates and parts, and welding consumables, made a quiet stock market debut, listing for Rs. 193 per share, a significant 15% premium over its issue price of Rs. 168,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“The P/E valuation of the IPO is deemed reasonable. Those who took part in the IPO may choose to hold onto their shares while keeping a careful eye on the company's performance and the state of the market, as well as maintaining a stop loss at the issue price,” she adds.

Nyati believes that the organisation is positioned for future growth by prioritising forward integration and diversity. It has shown steady financial growth and expanding profits.

Diffusion Engineers raised ₹158 crore via IPO, which was subscribed 114.50 times after receiving an overwhelming response from all the categories of investors. The issue, which opened for subscription between September 26-30, received bids worth ₹12,692.67 crore against the offered 65,98,500 equity shares, at a price band of ₹159-168 apiece.

The issue was subscribed 85.61 times in the retail category, 207.60 times in the non-institutional investors segment, and 95.74 times in the qualified institutional buyer portion.

Ahead of the opening of the IPO, Diffusion Engineers Limited raised ₹47.14 crores from anchor investors, which saw participated from HDFC Mutual fund through HDFC Defence & Dividend Yield Fund, Prashant Jain backed 3P India Equity Fund 1, Saint Capital Fund, Craft Emerging Market Fund PCC – Elite Capital Fund, and others.

Domestic brokerages such as Canara Bank Securities, BP Wealth, StoxBox, Swastika Investmart, and Ventura Securities have given a “subscribe” rating to the issue, citing the high potential for growth in the Indian market for welding consumables. Diffusion Engineers has invested in R&D to differentiate its products from competitors, operating a DSIR-approved facility that focuses on refining processes and testing materials to meet client-specific needs. With subsidiaries in Singapore, Malaysia, and Turkey, the company is targeting new regions while continuing to build long-term relationships with its domestic and international customers.

The issue is entirely a fresh issue of 0.94 crore shares which will be used to fund capital expenditure requirements towards expanding the existing manufacturing facility at Nagpur, Maharashtra and setting up a new manufacturing facility in this region. A part of the fund will be used to fund the Company's working capital requirements and meet general corporate purposes.

Unistone Capital Private Limited was the sole book running lead manager, and Bigshare Services Private Limited was the registrar of the issue. 

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